Major points to consider to get a commercial loan

Any general questions you might have in regards to loans and finance.
Post Reply
Mikey Whimpreck
Posts: 8
Joined: Wed Mar 16, 2016 7:45 pm

Major points to consider to get a commercial loan

Post by Mikey Whimpreck »

I am planning on getting a commercial loan but I am not sure I’ll be able to provide all of my financials. I want to know if I can take out such a commercial loan. What should I focus on so I can get a commercial loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Major points to consider to get a commercial loan

Post by Otto Dargan »

Hi Mikey Whimpreck,
As with any investment, you are likely to lose money if you do not consider all the aspects of the investment before making a decision. So, it is a good idea to consider the following before you buy commercial property:
  • Your affordability: You’ll generally need to have significant equity to buy larger commercial properties. Since you are in it for the long term, make sure you can afford to buy the property.
  • Familiarity with the area: Consider the location of the property and the infrastructure it has access to. Although cheaper, commercial properties in remote locations or without proper infrastructure may not make you money.
  • Tenancy situation: You can look for strong corporate or government tenants with long-term leases. A commercial property with multiple tenants is also preferable. Also, consider the ability of the tenant to pay the rent.
  • Security property Acceptability: Your commercial property loan application may be rejected because of your security property. Lenders prefer properties that aren’t specialised and in a good location such as a regional centre.
  • Loan features: You may be paying more than you need to if you have commercial loan features you never use. Decide on only those features that can help you meet your goal. For example, if you’re planning on refinancing soon, don’t fix your interest rate.
It’s highly recommended that you speak with a professional financial advisor before you buy a commercial property.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Mikey Whimpreck
Posts: 8
Joined: Wed Mar 16, 2016 7:45 pm

Re: Major points to consider to get a commercial loan

Post by Mikey Whimpreck »

Thanks for the reply Otto. I have a 30% deposit but what I actually want is to get a low interest rate on a commercial loan. How could I be able to get a lower rate?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Major points to consider to get a commercial loan

Post by Otto Dargan »

Hi Mikey Whimpreck,

Many lenders base their commercial loan interest rates on the level of risk that your loan application poses on their risk matrix. The matrix generally considers the following:
  • The location, condition, and market appeal of the security property.
  • The current state of the local property market as well as the future state.
  • Your ability to meet the mortgage repayments, the Loan to Value Ratio (LVR) and your asset position.
  • Your business track record or management experience.
  • Your property portfolio and the level of diversification.
  • The time left on the lease.
Please note that these are general information only and there are other factors that lenders consider and may assess as a risk.

You can discuss your situation and loan needs with one of our mortgage brokers by calling us on 1300 889 743. You can also fill in our free online assessment form and one of us will contact you instead.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Mikey Whimpreck
Posts: 8
Joined: Wed Mar 16, 2016 7:45 pm

Re: Major points to consider to get a commercial loan

Post by Mikey Whimpreck »

Thanks Otto. I’ll discuss this with my partner and come back to you after a week. Bye.

Post Reply